Germany has revised up its bullish forecast for economic growth next year amid the prospect of record levels of employment.

Europe’s engine-room economy now expects GDP to expand by 1.7 per cent, up from an earlier prediction of 1.6 per cent, in an encouraging sign that the 17-member eurozone will avoid a return to recession.

The German economy was forecast to add 235,000 jobs this year and a further 180,000 in 2014, taking the number of people in work to 42 million, with 2.9 million unemployed.